LISBON, Portugal – Portuguese opposition parties and labour groups vowed Wednesday to fight the government’s latest austerity measures, which are being adopted in return for a 78 billion-euro ($105.6 billion) bailout agreed on in 2011.
The state budget proposal for 2014, published late Tuesday, includes cuts to the pay and pensions of state employees for a third straight year as the government looks to save 3.9 billion euros. Government workers earning more than 600 euros a month will have their pay cut by up to 12 per cent, while pensions higher than 600 euros a month will be reduced by about 10 per cent.
The Common Front, an umbrella group that includes more than 30 trade unions representing government workers, announced a national strike by its members Nov. 8.
The main opposition Socialist Party described the draft budget as “brutal” and said it will vote against the spending plan in Parliament later this month, though the coalition government has enough votes to push through its proposal.
The government says it has to slash spending to meet next year’s deficit target of 4 per cent of GDP, which is demanded by the country’s bailout creditors. The government forecasts that the deficit for this year will be 5.9 per cent.
The government and the so-called troika of bailout creditors — the country’s fellow eurozone members, the European Central Bank and the International Monetary Fund — insist that Portugal must repair its public finances to restore investor faith in the country. Market confidence is needed so that Portugal can improve its credit rating, currently classified as junk by the three main rating agencies, and resume long-term borrowing in bond markets in the middle of next year, when the bailout program ends. Portugal needed the financial rescue after nervous investors stopped lending it money at affordable prices.
The government debt agency said it sold 1.5 billion euros in short-term debt Wednesday.